Amazon's Deal with the Labels, Hands-On with the New App

Amazon isn't eating its hat (maybe a bit of the brim), and it isn't an app failure, either.

Yesterday, Amazon pulled the curtain off its all-you-can-eat music streaming service, Music Unlimited. At least in part, the launch was particularly interesting because of Music Unlimited's tiered pricing, particularly the $3.99 per month option for those who only wish to use the service on their Echo smart speaker.

Two sources with knowledge of the contracts tell Billboard that Amazon's deal was fairly standard and at now-well-established market rates -- usually 55-60 percent of revenue goes back to the owners of the music, along with certain minimum revenue guarantees. But, while Amazon is not eating the cost of the $3.99-per-month Echo-only subscription, it is paying for the difference on the $7.99-per-month option available to Prime subscribers, meaning its "losing" $2 on each subscription. That difference is is, presumably, made up for by encouraging further daily use of the Echo, which is partially oriented towards minimizing the friction of buying things through Amazon.

"[Labels] recognized," Amazon's head of music Steve Boom told Billboard ahead of Music Unlimited's launch, "that with this tight coupling of the device, it's indistinguishable from the device. We're going to grow the market -- these will be new customers to streaming."

Indeed, the "Echo tier" will, everyone (including Amazon) is hoping, get customers habituated to music streaming, and encourage them to pay for the more expensive subscription options, which they can take with them when out of Alexa's earshot.

About that last -- in our brief time with its new app, Amazon Music, a difference seems to have been split between Spotify's clean, playlist-focused interface and Apple Music's art-heavy but congested, still-living-with-iTunes vibe. On first startup, previous purchases are added to the library and recommendations are given based on those, as well as a scan of the existing music library on your device. As well, its recommendations aren't offensive to music snobs or casual listeners. The service's biggest coup, clearly, is the very usable voice technology within Echo (via Alexa), but its standalone app is far from a miss.

(And for those that don't need any of this, you can still get a "free" subscription to Amazon's less-robustly populated Prime Music.)